MANKATO — A Mankato program that offers used and new homes to eligible buyers at roughly half the market price could grow to nearly 40 over the next two years.
City leaders are pledging another $300,000 to the Partnership Community Land Trust for its sixth phase. Combined with county and state funding, Phase VI would produce 10 new homes to be sold at affordable prices in 2028 and 2029.
First, though, the plan needs to win a $2 million allocation from the Minnesota Housing Impact Fund later this year.
To support the application by the Southwest Minnesota Housing Partnership, which administers the Partnership Community Land Trust, the City Council pledged $200,000 from its local affordable housing trust fund and another $100,000 from the city’s federal Community Development Block Grant allocation.
The Blue Earth County Board is expected to chip in $100,000 from its affordable housing trust fund if the state dollars are awarded.
If the effort is successful, it will increase the number of land trust homes by more than a third.
“We have seven right now, and they’re in the process of doing roughly 20 homes for the next year,” said Nancy Bokelmann, who oversees housing programs for the city and county.
The program provides a steep discount for income-eligible homebuyers, who are typically renters purchasing their first home. That’s done partly by the traditional land trust strategy where a buyer purchases the house while the trust covers the cost of the underlying lot.
In return, if the buyer sells the home in the future, they receive only a portion of the appreciation — the rest stays with the property to make it more affordable for the next eligible buyer.
Mankato’s land trust model also is providing additional direct subsidies to reduce the overall price being paid by the buyer.
Phase VI will provide an estimated $30,000 in city subsidies and $10,000 in county subsidies for each home. When combined with $200,000 per home from the state, that will cover about half of the construction cost of a home, leaving the buyer — who must be at 80% or less of the median area household income — needing to finance only the other half.
The local subsidy for each home is actually declining as Mankato’s 6-year-old land trust continues to expand.
“That would be roughly $40,000 per home,” Bokelmann said of the upcoming local subsidy. “In the past — the last two phases — we’ve been putting in $50,000. So we started with $70,000 (in local subsidies per home) and now we’re moving down on those amounts, which is kind of what our goal has been.”
SWMHP’s Community Land Trust website displays many of the homes that have already been sold with prices ranging from $122,000 for a used three-bedroom house to $206,000 for a new four-bedroom home.
Homes now on the market or coming later this year include two used homes on Rita Road and Belle Avenue, four new-construction houses in an eastside subdivision and four more newly constructed homes in the Tourtellotte and Germania Park neighborhoods.
More information can be found at homeownership.swmhp.org/land-trust-homes.